Glossary
CARBON FOOTPRINTING
The calculation of the total greenhouse gas emissions caused by a product or an organisation
CARBON INTENSITY
Volume of carbon emissions per million dollars of revenue (carbon efficiency of a portfolio), expressed in tons CO2e/$m revenue; Scope 1 and Scope 2 GHG emissions are allocated to investors based on an equity ownership approach. The company’s (or issuer’s) revenue is used to adjust for company size to provide a measurement of the efficiency of output.
DISINVESTMENT (DIVESTMENT)
Selling the shares of a company in response to concerns over environmental, social, governance or ethical issues
ENGAGEMENT
Continued dialogue with a company and other relevant parties in order to influence their behaviour on environmental, social or governance practices
ESG
Environmental, social and governance
GREEN PREMIUM
The incremental price one would need to pay for a low-emission substitute of a high-emission incumbent product/service
HARD TO ABATE SECTORS
Sectors where the transition to net zero is either technologically or financially difficult
LOCK-IN
Factors that preserve the status quo – no matter how bad – and smother any impetus for change
MATERIAL SECTORS
Sectors with the most significant contribution to emissions, defined as those in NACE (Nomenclature of Economic Activities) code categories A-H and J-L
NET ZERO
When anthropogenic emissions of greenhouse gases into the atmosphere are balanced by equivalent removals from the atmosphere over a specified timeframe
NET ZERO ALIGNED/ALIGNING
When a company has emissions targets, trajectory and strategy that are either already commensurate with a Net Zero pathway or credibly on the journey to being so
PARIS AGREEMENT
A global agreement reached in December 2015 at the United Nations Climate Change Conference in Paris and ratified in October 2016 with the aim of limiting the global temperature rise this century to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C
REBASED EMISSIONS REDUCTION
An emissions target that compares the portfolio being assessed with the emissions reduction achieved by that same portfolio of holdings, rather than against the emissions reduction achieved by the portfolio itself (which may have had very different holdings in previous years)
STEWARDSHIP
Active engagement with a broad range of stakeholders and voting at company meetings